US Oil Rig Count Tumbles, Crude Price Dips Below $62

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In the week ended January 5, 2018, the number of land rigs drilling for oil in the United States totaled 742, five less compared to the previous week and up by 213 compared with a total of 529 a year ago. Including 182 other land rigs drilling for natural gas, there are a total of 924 working rigs in the country, down by five week over week and up by 259 year over year. The data come from the latest Baker Hughes North American Rotary Rig Count released on Friday.

West Texas Intermediate (WTI) crude oil for February delivery settled at $62.01 a barrel on Thursday, its highest level in three years, and traded down about 1% Friday afternoon at $61.40 shortly before regular trading closed.

The natural gas rig count remained unchanged at 182 this week. The count for natural gas rigs is now up by 47 year over year. Natural gas for February delivery traded down about 3.3% at around $2.79 per million BTUs before the count was released and was essentially unchanged following the report’s release. Earlier this week natural gas delivered to New York City hit a record high of $175 per million BTUs.

S&P Global Platts on Thursday reported that the total U.S. rig count for land, inland waters and the Gulf of Mexico totaled 1,030 at the end of December, down 23 compared to the total of 1,053 at the end of 2016. Senior industry analyst Trey Cowan said:

The appetite for shallow conventional wells waned during December and accounted for nearly the entire pullback in drilling activity during the month. But the fact that horizontal drilling continued at a stable pace over the holidays suggests that underlying prices of oil and gas are at levels that will likely cause the overall U.S. rig count to climb during 2018.

Horizontal drilling rigs total 798, up two for the week and up by 264 year over year, according to Baker Hughes.

Among the states, Baker Hughes reported that Wyoming added two rigs while New Mexico and Texas added one each. Louisiana lost six rigs this week, Oklahoma lost two, and North Dakota lost one.

In the Permian Basin of west Texas and southeastern New Mexico, the rig count now stands at 400, two more compared with the previous week’s count. The Eagle Ford Basin in south Texas has 70 rigs in operation, unchanged week over week, and the Williston Basin (Bakken) in North Dakota and Montana now has 46 working rigs, down one for the week.